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IBM Under Antitrust Investigation

Has IBM abused its mainframe monopoly?

Gee and it was only four o’clock yesterday morning Microsoft time that Microsoft’s general counsel Brad Smith remarked that antitrust regulators might try targeting somebody else besides Microsoft for a change.

Like, oh, say, maybe, IBM for its $5 trillion 100% mainframe monopoly ­ and here we are just hours later and the New York Times, followed by simply everybody, darling, is reporting that the Obama Justice Department has opened a preliminary investigation ­ complete with subpoenas ­ into charges that IBM has abused its mainframe monopoly ­ the one that IBM swore back in 1997-2001 it would never abuse again so it could get out from under its 1956 consent decree with the US government.

IBM did Microsoft an immeasurable amount of dirt helping to keep the European Commission’s antitrust complaints against Microsoft alive, which explains why Microsoft has been fanning this particular spark.

Anyway, besides telling the regulators it would always license its mainframe widgetry on reasonable and non- discriminatory terms, IBM also basically told the government that non-IBM mainframe gear would eventually replace mainframes, but it has acted ever since 2001 to stomp out any non-IBM rival ­ like mainframe- to-Itanium player Platform Solutions Inc (PSI), which IBM bought last year to shut it up; mainframe reseller T3 Technologies (T3T), which it crushed; and the Hercules open source project that promises to let IBM mainframe operating systems run on x86 platforms, an outfit now trying against all odds to go commercial.

The Times says the DOJ is seeking information from IBM’s mainframe competitors, which may be kinda hard since there’s nobody left.

The DOJ is responding to a “lock-in” complaint ­ by way of a white paper ­ submitted by the Computer and Communications Industry Association (CCIA), a trade organization whose members include Microsoft and Oracle, which means to buy Sun to poke IBM in the eye.

Among other things CCIA accuses IBM of price gouging, exclusionary behavior, tying its operating system to hardware, driving two dozen companies out of business and moving into adjacent Internet markets, the kind of stuff that would send normal folk to jail for a hundred years.

T3T filed a similar complaint against IBM with the European Commission and a private antitrust suit against IBM in New York but last week the New York case was thrown out on the judicial contention that T3T was the wrong company to file suit (lack of antitrust standing in legal parlance) because it was piggybacking on a PSI suit that IBM put out of commission when it bought the thing.

The court said T3T wasn’t a direct target of IBM’s alleged monopolization; and indirect injury is a Gordian knot of distant relationships for antitrust law ­ at least in New York ­ which likes its injuries clear and direct, with the blood all over its carpet.

T3T said it would appeal.

IBM gets an estimated 25% of its revenues from mainframes, which continue to hold an incredible amount of the world’s data.

Would-be rivals complain that IBM refuses to license its mainframe operating systems which it’s pledged to do. CCIA claims that’s an “abuse of intellectual property” although district court Judge Lewis Kaplan found last week in the T3T case that IBM’s refusal to license “does not constitute anticompetitive conduct.” Oh, dear, another conundrum.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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